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AIGers Who Sold Risky Deals To Get Millions In Bonuses
What would you have to do not to get a bonus?
AIG, the insurance giant that was essentially nationalized in September, has confirmed to the Associated Press that it's paying bonuses to employees who sold credit default swaps -- the very deals that helped cause millions in losses, leading to the company's collapse.
According to news reports, the bonuses amount to $450 million -- or $1.13 million for each of the 400 staffers in the financial products unit.
In a statement, an AIG spokeswoman confirmed the bonuses, but not the dollar figure:
We adopted and disclosed this contractual retention program months before the government provided support to AIG. We did so because it was clear, given the market environment, that we would need to retain employees to manage the complex issues arising in our Financial Products business, which we are now unwinding.
An expert tells AP that it's possible AIG was contractually obligated to pay the bonuses. But that points up a larger problem: the TARP didn't allow the government to invalidate those agreements, as a bankruptcy judge would have been able to do. Since AIG and other firms were essentially bankrupt, there's a good argument that the same rules should apply.
Former Merrill Lynch CEO John Thain has come in for criticism (by TPMmuckraker, among others) for signing off on billions in bonuses, on an accelerated schedule, despite seeing massive losses and a government assisted takeover by Bank of America.
Josh
Zachary
Two questions:
1. Why do we need to retain the folks that got the company into this mess?
2. Where would they go? I must have missed the news item about the massive new hiring in the financial sector...
January 28, 2009 11:57 AM | Reply | Permalink
... as we continue our downhill slide away from democracy and to-ward...
January 28, 2009 12:14 PM | Reply | Permalink
Here is the name and mailing address for AIG's Director of Public Relations.
Joe Norton
AIG
70 Pine Street
New York, NY 10270
Here is the contact information for 21st Century Insurance, a subsidiary of AIG as of last year.
Address
6301 Owensmouth Ave., Suite 700
Woodland Hills, CA 91367
(818) 704-3700
http://www.i21.com/
Top Executives
Robert Sandler, Chairman
Bruce Marlow, Vice Chairman
Mel Spinella, CFO
Michael Cassanego, Senior VP
Richard Andre, Senior VP of HR
I've had my automotive insurance through 21st for years, and I have been very happy with their rates and service. That being said, I wasn't thrilled when AIG took them over, but accepted it. Based on this latest news, I intend to a) write to AIG informing them of how offensive it is to pay bonuses to these executive in this economic climate, b) suggest that these executives take an across the board 10-15% pay cut (really if you're making $1m, is 900k that much of a hit), and c) informing them that if I do not hear of substantive changes in their policies within 60 days, I will be taking my money away from them, paying someone else for my insurance, and recommending that everyone I know do the same.
We need to make our voices heard both in writing and through where we spend our dollars. Shannom makes a good point. It's not like the job market is booming for the job seeker right now.
I'm also thinking of moving my banking from Chase/formerly WAMU to my local community bank. I liked WAMU so much that I bought stock in its final days and lost my meager $500 investment. I am opposed to the concept that any corporation can be too big to fail. If they are that big, they need to be divided into smaller independent units. Corporations are not people and should not have legal standing as such.
Feh!
January 28, 2009 1:15 PM | Reply | Permalink
If AIG's been federalized, but they're contractually obligated to give these people their bonuses, then the least they could do is give them a pink slip with their bonus check.
How in the world is this a "bonus" if they're required to give it?
January 28, 2009 1:42 PM | Reply | Permalink
Cheeseheads Faking Crust!!
This news makes me angry. I never got an answer to the question of how many Merrill Lynch employees divvied up the $4 billion bonus pool, but it seemed to me that the average bonus must've been in the millions.
In this case, the math has been done already, and yes, the average "bonus" is over a million dollars. For 400 individuals who ran an enterprise into the ground. In a company that I now own (along with the rest of you here in the US of A).
Thanks, PHR, for the tip on 21st Century. I had used them years ago (in another state), and was thinking about getting a quote from them to compare with my Progressive policy. But I guess I'll just stick with Progressive now.
I recently cashed out an annuity policy that I'd started right out of high school with Franklin Life Insurance company -- which has since become part of AIG. I'll take my money elsewhere, thankyouverymuch.
I can't believe these people are getting pro athlete movie star salaries to steal money. That's just sick. I guess I was a fool to study engineering and get a real job. I could retire in a couple of years if I were making million dollar bonuses. (And I bet I'm smarter than most of those 400 douchebags.) This really pisses me off!
-- ARG
January 28, 2009 1:48 PM | Reply | Permalink
I'm glad my input was helpful to you. I would recommend that you send a letter as well. The only thing that MIGHT make a difference is if these executives hear from the customers and potential customers that they are screwing over.
January 28, 2009 7:17 PM | Reply | Permalink
1 million dollars in bonuses for a failed strategy of financial wizrds who drove the company in collapse. What the hell is going on except a case of fraud and theft!!! This isn't the American way and we need a trickle up program where each citizen gets a large amount of bailout money to pay down debt, make investments and spend on American goods. Banks recieve money, Wall Street gets investment dollars and economy moves with new spending. Why not this approach versus the thefts going on now!
January 28, 2009 1:49 PM | Reply | Permalink
Here's an idea for a stimulus - NO ONE pays taxes on their first 100,000 in income from a job. Capital gains and passive incomes are taxed at a higher rate to make up the difference. Anything over 100,000 is still subject to the same rate of taxes as always. Even though 90 percent of us fall into this category, I bet it's still less of a hit to the federal budget than what they are doing already.
January 28, 2009 2:47 PM | Reply | Permalink
How about your plan plus 100% income tax on any pay above $200,000?
January 28, 2009 4:43 PM | Reply | Permalink
What would you have to do not to get a bonus?
In my experience in corporate america - if you are white, male and have a title, you can lose huge amounts of cash, forget to do a major report (and then blame it on your secretary)take credit for the work other people did, and even spend your afternoons at a strip club then have the crazy boyfriend of one of the strippers show up in the office and threaten the receptionist - and you will still get a big fat bonus. And yes, all of those things really happened.
January 28, 2009 3:26 PM | Reply | Permalink
A couple of friends who work for Citigroup and fortunately weren't laid off are still taking home six-figure bonuses this year, despite the massive taxpayer dollars propping up that company. I'm paying their bonus. With the irony being that my company never had a better year than last year, but my business unit only did okay, so, surprise, I'm not getting a big bonus. I guess I should have gone into finance instead of into a field where bonuses are based on performance.
January 28, 2009 9:33 PM | Reply | Permalink